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Thanks to the unwavering interest of foreign institutional investors (FIIs) in the India story, equity markets have remained resilient in the past couple of years, hitting lifetime highs last week. Indeed, even as the conviction of foreign investors has increased, local institutions appear less impressed. The numbers tell the story: Since the global financial crisis broke out in late 2008, FIIs have invested $50 for every $1 sold by domestic institutional investors (DIIs).

Foreign investors have pumped in $79 billion in the last five years or so, driving up the Sensex from 8,160.40 points on March 9, 2009, to a high of 22,023.98 points on March 10, 2014. In the process, FII ownership of Sensex stocks has jumped to multi-year highs. “FII holding in Sensex companies is currently at an eight-year high due to consistent buying in index stocks, especially in the consumer, pharma and private bank stocks. In the wider BSE 200 index, the FII stake is already at an all-time high at 23.5%,” Bank of America Merill Lynch analysts said in a recent research report.

FIIs have been buyers in India since February 12, 2014, although emerging market (EM) funds are seeing a sell-off. EPFR Global data for the week ended March 12 show EM funds posted net outflows for a record 20th week at $2.51 billion. Meanwhile, FIIs have been net buyers of Indian stocks in 21 of the last 22 sessions with total purchases of $1.6 billion.

Foreign funds have remained net buyers despite India’s economy slowing in the last couple of years. For instance, in FY13, while India’s GDP grew at its slowest pace in a decade at 4.5%, FIIs pumped in $25.83 billion. Moreover, India saw its third-highest foreign inflows of $20 billion in CY13, even as retail inflation remained elevated, rising to 11.6% year-on-year in November .

Over the last four years (2010-2013) alone, Indian markets have seen over $74 billion of foreign inflows, with CY10 seeing the highest ever inflows at $29 billion. While FIIs turned net sellers in CY11 at $511 million amid concerns about the future of the euro zone, they reiterated their faith in Indian markets in CY12 with second-highest inflows of $24.54 billion.

On the contrary, DIIs have been a lot more circumspect, selling $1.5 billion worth of Indian stocks since 2008. According to market observers, domestic savings are shifting towards low-risk assets. “From capital market instruments such as mutual funds and insurance